Daimler Cuts 2018 Outlook After Lower 3Q Projections

Daimler AG on Oct. 19 cut its earnings outlook this year for the Mercedes-Benz Cars and Daimler Buses divisions and for the Daimler Group.

As a result, earnings are significantly below market expectations, according to the Stuttgart, Germany-based company, which reports in euros.

Group earnings before interest and taxes, the measure of operating profit at Daimler, is expected to be $2.86 billion compared with $3.92 billion in the 2017 third quarter.

The news shocked investors and Daimler shares fell the most since June, when the company last cut its outlook, Bloomberg News reported. Late Oct. 18, shares were trading at $59.19, down 1.5% for the day.

Daimler, which is the world’s largest truck maker, said the assessment is based on a number of factors:

An increase in expected expenses in connection with ongoing governmental proceedings and measures in various regions with regard to Mercedes-Benz diesel vehicles.

Lower unit sales at Mercedes-Benz Vans due to delays in vehicle deliveries.

The potential need to take action on certain vehicles still operating with the previously used refrigerant R134a in light of a recent ruling by the European Court of Justice.

Decreasing demand in some markets for Daimler Buses.

EBIT for the divisions amounts to:

Mercedes-Benz Cars: $1.5 billion, down from $2.4 billion in the third quarter of 2017.

Daimler Trucks: $979 million, an increase compared with $707 million a year earlier.

Mercedes-Benz Vans: A loss of $107 million compared with EBIT of $246 million a year earlier.

Daimler Buses: $35 million, down from $37 million in the 2017 third quarter.

Daimler Financial Services: $451 million, down compared with $585 million a year earlier.